According to a study conducted by Wall Street analyst, Tom Lee’s agency, Fundstrat, BTC prices below the $8K range make it awfully difficult for miners to gain revenue. Lee details that at a global average rate of six cents per kilowatt-hour, some BTC miners are either breaking even right now or mining the cryptocurrency at a loss.
Break Even Revenues and Losses
The price of bitcoin and several hundred other cryptocurrencies are suffering from the largest drop in value in well over a year. 2017 turned out to be a phenomenal run the entire year but after the new year, things started looking quite bearish. BTC’s value, in particular, is hovering just above the $7,500 zone at the time of writing and at that global average some miners are mining bitcoin at break-even costs or even running operations at a loss.
Fundstrat’s Tom Lee explains his team has devised a model that incorporates multiple factors including equipment cost and performance, electric costs, and other types of overhead. The Fundstrat research report explains:
Bitcoin currently trades essentially at the break-even cost of mining a bitcoin, currently at $8,038 based on a mining model developed by our data science team.
Competing With China Means 4 Cents or Less
The research model is based on a global average of six cents per kilowatt-hour. There are definitely some areas in the world such as China that offer far cheaper electric rates. China’s rates for power can be 4 cents or less per kilowatt-hour. Other regions in the world that offer cheaper methods of power production like hydropower can also offer competitive rates as well…